WED, APRIL 17 2019-theG&BJournal- For the first three months through March 2019, Access Bank’s net income was up 85.93 percent to N41.14 billion from N22.11 billion the previous year.
The growth at the bottom line was driven by foreign exchange income of N6.21 billion in the period as exceptional items continue to compensate for weak revenue.
Net profit margin increased to 25.84 percent in the period under review as against 16.07 percent the previous year, which means the lender’s been turning each Naira invested in revenue into higher profit.
Return on equity, another measure of efficiency, rose to 30.90 percent in March 2019 from 18.30 percent as at March 2019 while cost to income ratio has improved to 53.20 percent in December 2019 from 61.70 percent the previous year.
While Access Bank recorded an improvement in key profitability metrics, the lender’s Non performing Loans (NPLs) is worrisome since it acquired Diamond Bank.
The Bank said during the merger update conference call that additional N155 billion in loan loss provision was transferred from Diamond into its books. Hence, total provisioning expanded to N243 billion as at December 2018 as NPL increased by more than fourfold to N284 billion.
Post consolidation of the balance sheet, capital adequacy ratio (CAR) adjusted for the Central Bank of Nigeria (CBN) forbearance on the full impact of IFRS 9 stood at of 22.51 percent as against full year 20.78 percent as at December 2018. However, adjusting for the full impact of IFRS 9, CAR settled at 19.00 percent compared to 19.90 percent as at December 2018.
Access Bank’s stock currently trades at a current P/B of 0.36x which is at a discount to peers of 0.74x.
“Our last communicated FVE on ACCESS is N11.80, however, we have a HOLD rating on the stock. We will revisit our numbers after further analysis and discussion with management,” said analysts at ARM Securities Ltd.
|twitter:@theGBJournal|email: info@govandbusinessjournal.com.ng|
